Strategic-alliance
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Great addition to your OD/OB toolbox

Finally breaking the mythThe insights of this book will give managers a tool for how they can build successful relationships and how they can improve it. Also students will benefit from this book, as it combines theory and practise in an easy manner. A 'have to read' for anyone who wants to build business relationships that go beyond contracts.

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Interfirm networks in Japanese semiconductor industryhostile relationships many American and European firms have with subcontractors, in Japan, these relationships involve a much higher degree of cooperation and delegation of a more sophisticated set of responsibilities to subcontractor. This kind of relationship is cited as an excellent example of the trust-based interfirm networks which substantially reduce the transaction cost involved in transactions along the value chain, and is known as the vertical keiretsu.
Such interfirm networks have persisted since the Meiji period, and were constructed in an effort to reduce the uncertainty engendered by market fluctuation. If it¡¯s not the commodified items, frequent switching of subcontractor could result in instability in the quality and quantity of it. With trust-based long-term relationship, they could expect timely delivery, quality control, and stable supply. But this trust-based long-term relationship introduced the rigidity and inflexibility to cope with the dramatic shifts in the environment. The first oil crisis posed a serious threat to the viability of Japanese firms. Cut-throat competition over shrunken international market drove the Japanese firms to enhance competitiveness in all front from cost, quality and the lead time. In doing so, they changed the dynamics of the networks. What they introduced is the subject of this book, in the words of the author, ¡®competitive-cum-cooperation governance, in short, CCC governance. The author deals with the interfirm governance in Japanese semiconductor industry, in particular. But the findings could be applied to other industries like auto, electronics.
CCC governance was developed to introduce the uncertainty in the vertical chain to create market-like effect. While maintaining cooperative links, semiconductor manufacturers imposed several competition-generating measures: strategic pricing, multiple sourcing, and altering procurement sourcing. In strategic pricing, interacting companies cooperatively developed a schedule for reducing prices. In multiple sourcing, semiconductor companies purchased the same parts and materials from multiple sources, so that competition took place among them. While awarding stable cash flows to subcontractors, semiconductor manufacturers could secure the continuous improvement of price and quality. According to data the author provides, the prices were much lower than the spot market transactions. In the words of the author, With CCC governance the Japanese semiconductor firms secured both the allocative efficiency which is the feature of market governance, and the non-allocative efficiency which is the feature of hierarchical governance.
Now you might ask ¡®Is there any reason to coin another neologism? There is already the mountain of seemingly different words which actually have one and the same reference.¡¯ Maybe. The vertical keiretsu could cover the same phenomenon. But author¡¯s intention lies in demonstrating the feature of network which has both cooperation and competition while securing the competitiveness. I think author persuasively illustrates it. And better, he does so not with case study which is hard to represent the population, but with the survey technique. This feature, however, is the weakness at the same time. The author succeeds in drawing out overall picture of the industry. But it lacks the rich depth of the usual business case studies. This makes the book somewhat dry. But I think it worth reading, if you are interested in the Japanese business.


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Beyond Typical Supply Chain ManagementSecond, and more importantly, Davis and Spekman emphasize the importance (and challenge) of true collaboration across enterprise boundaries. While supply chain integration is usually treated as a primarily a matter of gaining visibility or improving synchronization throughout a chain (ie, linking IT systems), Davis and Spekman show that true collaboration depends the integration of business processes and the creation of trust outside traditional enterprise barriers. In short, Davis and Spekman have elevated trust to the level of an absolutely necessary condition for true collaboration in the context of SCM.
Davis's and Spekman's message comes none too soon for companies that have been been burned by ERP or CRM system implementations that have failed to produce results or recover costs, or partnerships that dissolve in frustration. Even when the IT or business process aspects of such implementations are handled flawlessly, ignoring the "softer" side - i.e, failing to build trans-enterprise trust - produces predictable results and destroys shareholder value.
As a consultant dealing with issues surrounding SCM and external coordination, I recommend this book to executives, general managers, and other consultants whose clients struggle to integrate and collaborate across enterprise boundaries.

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